Israel needs large 2015 spending cuts, tax income -cbank chief

JERUSALEM, March 31 Mon Mar 31, 2014 5:29am EDT

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JERUSALEM, March 31 (Reuters) - Bank of Israel Governor Karnit Flug said the government will need tax hikes and spending reductions of 20 billion shekels ($5.7 billion) to meet next year's budget deficit target.

The Finance Ministry has set a budget deficit target of 2.5 percent of gross domestic product for 2015.

Flug said to meet the aim, state spending cuts of 12 billion shekels will be required, while tax revenue will need to bring in another 8 billion - either in tax hikes or improved tax collection.

"Certainly there will need to be ... an adjustment on the side of spending and an increase in tax revenue," Flug told a news conference on Monday, noting the government had committed to too much spending in recent years.

She added that Israel will likely meet its 2014 budget deficit target of 3 percent.

($1 = 3.5000 Israeli Shekels) (Reporting by Steven Scheer, Editing by Ari Rabinovitch)

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